Yannis Stournaras, European Central Bank Governing Council member and Greek central bank governor, said that given the slow progress in reducing inflation, the ECB is likely to cut borrowing costs only three times by the end of this year. Earlier, the ECB clearly signaled that it would begin a monetary easing cycle at the June meeting, but the path further ahead has become more uncertain in recent weeks.
Stournaras supported the idea of an interest rate cut at a meeting in June, but added that stronger-than-expected growth in the eurozone economy made three rate cuts more likely than four.
"If the current economic growth rate continues, then inflation growth is likely to be slightly higher than our March forecast, but without jeopardizing the 2% target in mid-2025," Stournaras said, adding that the ECB may cut the rate again at the July meeting, but the decision will depend on incoming data.
Now money markets are pricing in 70 basis points of ECB monetary easing in 2024.
According to official data, the eurozone annual inflation did not change in April, confirming economists' expectations. Meanwhile, core inflation declined again, and reached its lowest level since February 2022. According to the report, the consumer price index rose by 2.4% per year after a similar increase in March. Meanwhile, on a monthly basis, the consumer price index rose by 0.6%, slowing compared to March (+0.8%). The core consumer price index - energy, food, alcohol & tobacco - rose by 2.7% per year after an increase of 2.9% per year in February. Economists had expected an increase of 2.6% per annum.